service mktng process-
TRANSCRIPT
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PROCESSES IN SERVICEThere are several basis for classifying services .One significant way
is on the basis of processes by which services are created anddelivered
In marketing of physical goods it hardly necessary to acquaint theconsumer with he processes by which the goods are manufactured.That is the responsibility of the production people.
In services, however the customers and consumers are often verymuch involved in production of services It is therefore necessary to
understand the processes to which people are likely to be exposed.
A process is basically a series of pre-designed actions performed in aparticular sequence. Implicit in processes is that there is an input,
some through put andfinally the output.
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UNDERSTANDING SERVICE PROCESS
There are three main issues in understanding of SERVICE PROCESSES
a)VARIETY IN PROCESS b)VALUE ADDITION
c)TASK ALLOCATION
VARIETY IN PROCESSES Variety relates to the process being fixed non-varying sequence of activities
standardised Process has a direct bearing on costs, time, complexity ofoperations. Lower the variety, lower the costs.
Three types of processes can be mentioned under VARIETY
--RUNNER
Generally refers to a high degree of standardisation. Usually found in highvolume activity.ATMs, checking bank accounts,rly ticketing
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REPEATERS
These types of processes tend to be like Runners except that they are a little
more complex and occur a little less frequently
This happens when a firm that began with limited range, expands its offering.
They tend to involve re-learning
STRANGERS
These are tot. Rather infrequent. More like one0off.ally non-standardisedprocesses
Difficult to anticipate
Cannot prepare for such resources. Over a period of time, Strangers tend to become Repeaters & Runners
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VALUE ADDITION IN PROCESSES Processes consists of several sub-processes or activities
--Therefore it is necessary for the marketers to study which of the activities iscontributing more value to the customer.
The customer may not be giving equal value to all the activities.
TASK ALLOCATION
Depending on the relative importance of value tasks are allocated
accordingly.
egin a hotel Front-end operations are likely to be given far more importancethan back-end tasks.
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What is therefore getting processed in services?
Broadly two categories are getting processed
a) People
b) Physical objects
For each of these categories the process may be a) Tangible
b) Intangible
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THE PROCESSING MATRIX The four dimensions can be mapped as
Nature Of
ServicePeople Possession
Tangible
ActionsPeople Processing
Passenger Transportation
Health Care
Lodging
Beauty salonsPhysical therapy
Fitness centre
Restaurants/bars
Barbers
Funeral services
Possession Processing
Freight transportation
Repair/maintenance
Warehouse/storage
Office cleaningRetail distribution
Laundry/dry cleaning
Re-fuelling
Landscaping
Disposal/recycling
Intangible
Action
Mental Stimulus Processing
Advertising/PR
Arts/Entertainment
Broadcasting/cableManagement consulting
Information Processing
Accounting
Banking
Data processingData transmission
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Mental Stimulus Processing Information Processing
Information services
Music concerts
Psychotherapy
Religion
Voice Telephone
Insurance
Legal services
Programming
Research
Securities investment
Software
Consulting
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PROCESSES contd/-
People Processing Since time immemorial, people have sought servicesdirected a themselvestransportation, health, lookingmore beautiful etc
These are services in which the people must enter theservice system physically and engage themselves physicallyin delivery of the service.
The level of customer involvement may vary a lot---
It may be just 15 min in case of transportation to somedays in case of medical needs.
The service provider must reflect on certain non-financialcosts ie time, physical effort mental energy
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PROCESSES contd/-
Possession Processing Often a customer may ask for certain treatment to his
possession e g repair of washing machine, car repair,white washing of house etc
In such a service the physical presence is not anecessity. ,The customer may, of his own choice decideto be physically present
The object is either delivered to the service provider for
treatment or the latter arranges for it to be collected. Ifthe service is required for immovable assetspesticidetreatment for kitchensthen the service provider goesto the customer..
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PROCESSES contd/-
Mental Stimuli processing
These are services where the service provider isengaged primarily with the mind of the service seeker
education, religious advice, psychotherapy etc This is one area where the service provider has the
power to influence the clients mindattitude, createand alter perceptions The service provider has to
ensure that strong ethical standards are maintained.While some physical presence is necessary, the focus ison mental communication
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PROCESSES contd/-
Information Processing
Information is basically most intangible form ofservice output. It can, however, be transformed
into tangible form by converting it into adocument ,report, letters, books etc
The services most dependent on timely and
correct processing of information are financialservices, research, law, medical diagnosis.
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In services, the product can be physical goods or intangible offering or a
combination of both, A product may have three levels
The Core Product
This level has the basic features and is the main reason for consumption
In services, therefore, the product must perform the basic functionsolve thecustomers problem/satisfy his need.
e.g. Retirement Plans
FDsBanks
FDsReputed Cos
Mutual Funds/Pension Funds
Stocks-Pvt cos & Govt securities
Bullion
Real Estate
7Ps OF SERVICES MKT-PRODUCT
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Product contd/-
FORMAL PRODUCT
Once the formal product is launched and accepted .competitors step and lure theconsumers with differentiation based on technology. marketing, additional features etc
The differentiating aspects take the form of style, colour, prices, features
FDsBanks: Steady returns/Safety/Easy liquidity
FDsReputed Cos: Higher returns
Mutual Funds/Pension Funds Higher returns/growth
Stocks-Pvt cos & Govt securities: higher returns/capital appreciation
Bullion: secrecy, easy barter
Real Estate: reliability/solid growth
.
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Product contd/-
AUGMENTED PRODUCT
With further competition, the marketers added more features/attributes to the products fordifferentiation. These were all intangible and in the realm of services. e g
Warranties
Guarantees
After sales service
Customer education
Training
Home delivery
Installation etc etc.
Ultimately, it is services that has become the deciding differentiator
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SEGMENTATION IN SERVICES
The services marketer also attends to various segments likein goods marketing.
Indian Railways---has different trains like Shatabdi, Palace-
on-Wheels, Rajdhani
ICICI Bank has different cards for different customers-Silver ,Gold, Platinum, Petro Cards
Pantaloon RetailPantaloonsfor upper segment, Big Bazaarfor mid-segment
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SEGMENTATION contd/-
ITCPremium hotels/Budget hotels/Business ClassHotels
Jet AirwaysJetfor upper segment
Jet Lite for mid segment
Wheels-Rent-A-Car have
Transport Corporation of India for their truckingoperations
Gati /DTDCfor their courier operation
Assam Bengal Corporation for large containers andcargo
Ritco Travelsfor customers with travel needs
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BRANDING OF SERVICES
Like in consumer products, branding in services
also convey six levels of meaning:
--Attribute: 24 hr service from Citi Bank-----Citi
never sleeps
--Benefits: SBIThe nation banks on us
--Value: faith , trust, expertise HDFC/DelhiPolice With you, right through
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Branding contd/-
--Culture: Brands also convey the culture:McDonalds/Lufthansa/Dabbawalas / Chowki Dhani
--Personality: Brands also convey personality attributeseg NIITan intelligent person
Airtel talks about a can do person
--Users. American Express Cards are indicative ofachievers.
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Branding contd/-
Airtel talks about a can do person
--Users. American Express Cards are indicative of achievers.
Branding also ensures greater acceptance of new products asthey are perceived to be less risky.
All the products enjoy the benefits of promotion and advertising.Any advertisement of ICICI has a spill over effect on ICICILombard, ICICI Prudential, ICICI Bank etc.
Most service organizations offer a line of products rather than asingle product.
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Branding contd/-
The intangibility of services makes it difficult forcustomers to comprehend the totality of service offers.
Branding can .be used at both the corporate andproduct level.
Branding stands for a particular way of doing business Sub-brands, under the umbrella of corporate brand,
reflect the values of the latter. At the same time, the
sub-brand should spell out the promise being made theparticular service..
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PRICING PRICING OBJECTIVES
Revenue and profit objective
Make largest contribution to profit
Achieve a certain target levelnot necessarily maximising profits
Maximise revenue from a fixed capacity
Cover allocated costs/incremental costs
Cover direct costs of providing a particular service
Creating user base
Build demand
Achieve capacity utilisation
Stimulate trials leading to adoption
Build market share
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PRICE
COST BASED PRICING
--Full cost/mark-up pricing
--Marginal/Contribution pricing ABC
COMPETITOR BASED PRICING
--Going-rate pricing This approach is used where it is difficult to establish the exact cost.The market conditions are
such that the going rate is preferred.eg Nehru Place-Delhi, Chowpatty-Mumbai, Paratha Wali GaliDelhi
--Sealed-Bid pricing Here the price is submitted in form of sealed tenders.Transport contracts/canteens/housekeeping
are awarded on this basis
--Pricing below competition This approach is generally used when a new entrant enters and under-prices to gain some volume.
The danger is
a) You may go for cash losses
b) Competitors may retaliate:
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PRICING----contd/-
--Pricing above competition This pricing works when the service is a very exclusive and directed at the upper
segmentforeign banks/health clubs in 5-star hotels/restaurants in inter-continental hotels
DEMAND BASED PRICING
This pricing is based on what the customers are willing to pay. Different customers havedifferent capacity to pay. The service marketers skill lies in deep understanding ofconsumers demand and his ability to pay.correct identification of early adopters,middle-majority ,laggards
VALUE BASED PRICING No customer will ever pay more for a service than what he thinks its worth. Hence, the
marketers have to have a deep understanding of how the consumers perceives the service,It is therefore necessary to gauge the monetary valueof the incremental servicethrough marketresearch.
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VALUE BASED PRICING contd/-
Value generally is perceived as
--Value is low price
--Value is whatever I want in a product
--Value is the quality I get for the price I pay
--Value is what I get for what I pay.
In services we adopt the concept ofNET VALUE
--the sum total of all the perceived benefits less all the
perceived costs
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VALUE contd/- Value is the ratio of perceived benefits of the service to be
purchased to the price and other costs added to it
The benefits areproduct value, service value,
personnel valueandimage value
Product Value The worth assigned to a product by a customer eg a Samsung
refrigerator because of its technological features.
Service Value The worth assigned to a co by the customer eg LG,Hitachi because of
their guarantees, warranties, distribution network, service centers etc
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VALUE contd/- Image Value The worth assigned to a product because of its image
Monetary Value
The money paid for the item
Time Costs The time spent by the consumer in evaluating the product vis--vis other products
Energy Costs
.The physical energy spent by the customer in acquiring the service.
Psychological Costs
The mental energy spentworrying waiting,delays,
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RELATIONSHIP PRICING
This approach requires a deep understanding of consumer wherethe emphasis is on customising so that the customer finds itinconvenient to shift to other service providers.
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PROMOTION-MIX As services are performances, rather than physical goods, it often becomes difficult to
communicate the benefits of services. The issue of intangibility create four areas that
need to be attended to Generalityrefers to items comprising objects, people .events that do not have a
physical aspect or counterpart but the people are aware of these aspects eg flight service,
flight attendants. The task for the marketers is to communicate how his offering is better
than others in the market.
Non-searchability:--means that unlike a physical object which can be examined,
inspected, a service cannot be pre-checked Under such circumstances, the credentials of
the service provider have to be emphasised and re-affirming the exterior of a nursing
home may be very immaculate and clean, the staff may be dresses in a tidy and crisp
uniform but it still doesn't tell you about the skill Such issues are addressed by
communicating the degree/experience of the service provider
Abstractness.refers to concepts as financial advice, expert legal advice, sate
transportation etc Bring to the customers notice the testimony of satisfied customers
Mental Impalpabili ty.-Often services are too complex ,novel, multi-dimensional for the
comprehension of an ordinary customer. This is particularly true for new prospects..
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COMMUNICATION MIX
Marketing communications can be
Personal Impersonal
Personal Communication
Refers to personalised messages that establish a two-way communication betweenthe co and the customer.
Personal selling,
Tele-marketing
E- mailing
Word-of mouth
Customer Training
Customer services
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COMMUNICATION MIX contd/-
IMPERSONAL COMMUNICATION
Impersonal communication refers to a one way message that is directed towards alarge mass of prospects and customers rather than specific individuals.
Advertising
Sales promotion
Publicity
Public relations
Instructional materials-web sites/Manuals/Brochures
Corporate design
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Message Transmission
MESSAGES TRANSMITTED THRU PRODUCTION CHANNEL
Customer Service from Front-line staff
Customer trainingB-2-B
Service Outlets
MESSAGES TRANSMITTED THRU MARKETING CHANNELS
Personal Selling
Trade Shows
Advertising
Direct Marketing
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Message Transmission
contd/- Sales Promotion
Public Relations
MESSAGE TRANSMISSION FROM OUTSIDE THE ORGANISATION
Word-of-mouth
Customers holding strong views are likely to talk more than the customers havingmilder views.
Extremely dissatisfied customers are likely to complain much more than highly satisfied
customers.
Editorial/Media
Leading service providers may initiate their own media effort.
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BRANDING AND COMMUNICATION
Branding of services is important because strong brands increase the trust of thecustomers.
Service branding is a blend of
a) The presented brandhow the co presents itself thru controlled communications
b) External brand- thru non-marketer controlled channels ieWOM/media/editorials
c) Brand meaningthe dominant perception of the customer and the associations thatcome to himnot necessarily from personal experiences.
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Branding contd/-
Sub-Branding Many service organisations resort to sub-branding to differentiate their offerings
Air India-J Class/Y class
Std/chartered /Kotak/--Platinum/Gold/ Credit Cards
Bajaj Allianz -Silver Health/ Gold Policy
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PLACE
To understand the role of distribution in services, we must remember the basic
characteristics of services that differentiate services from products
INSEPARABILITY
Due to inseparability of services it is necessary for the service provider and the
consumer to meet for the exchange. Unlike goods, services cannot be produced in
one place and consumed in another place.
INTANGIBILITY & PERISHABILITY
Intangibility and perishability demand that the consumption and production of the
services has to be simultaneous.
Hence, to understand Place in services we must ask
1 How to deliver services to the customer?
2 Where and when should the delivery take place?
3 Role of intermediaries in delivery of service
4 How to balance the tangible/intangible components of the service?
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CORE & SUPPLEMENTARY SERVICES
CORE SERVICES
Core services require physical locations which tend to restrict distribution
Mahindra Club Holidays can be had only on some locations
A major surgery can take place only at a well equipped hospital
Major plays/drama are held at Lalit Kala Academy/Kamani
Auditorium/Prithvi Theater
SUPPLEMENTARY SERVICES
Information/pricing/timings/ticketing booking/billing/payments are of
supplementary nature and tend to be widely distributed.
The delivery of supplementary services has reached a very intricate and
sophisticated level
Internet/Widespread agents/Toll-free numbers/ Customer Care Centers etc
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TYPE OF CONTACT
The interaction between the service provider & consumer may involve the following
variable
i) The consumer may go to the co
ii) The Co goes to the consumer
iii) The co offers service at a single site
iv) The co offers service at multiple sites
TYPE OF CONTACT SINGLE SITE MULTIPLE SITE
Consumer goes to co Salon/Theatre Fast Food/DTDC
Co goes to consumer TV repairs/Gas delivery Maruti-On -Road
Co & consumer transact TV Broadcasting Stn Web mkt/Tel co
from an arms length
LOCATIONS BECOME IRRELEVANT WHEN THE SERVICE PROVIDER AND
THE CONSUMER NEED NOT INTERACT WITH EACH OTHER PHYSICALLY.
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CONSUMER BEHAVIOR
The location of service provider also depends on the consumers behavior
INVOLVEMENT
a) High Involvement-Buying an LCD TV/Washing Machine with dryer
b) Low Involvement
c) Impulse purchase
DEMOGRAPHIC PROFILE
Age
SERVICE DIRECTED TO
TYPE OF SERVICE
C di l i t/